What are you suggestions on these to scenarios?

[KenT845479]

First scenario:

1.  Husband has already been collecting SS for over a year and his wife will be retiring in August (She is also 62).  SSA said she would get a $688 benefit from her earnings and $214 from her spouse as a wife.($902)  Is this the best way for early retirement?  Could the wife collect 50% spousal support without claiming her SS retirement? (to be done at a later date.)

Second scenario: 

2.  A friend of ours recent told us that her spouse gets $1400 for his retirement (he's older) but She only gets $550.   Seems she is not getting the additional benefit of claiming up to 50% of her husband return?  Is there any way for them to update her SS claim so that she gets $700 (max 50% of her husband's SS?  Deemed filing?   

Thanks,

KC

[GailL1]

@KenT845479 

1.  Husband has already been collecting SS for over a year and his wife will be retiring in August (She is also 62).  SSA said she would get a $688 benefit from her earnings and $214 from her spouse as a wife.($902)  Is this the best way for early retirement?  Could the wife collect 50% spousal support without claiming her SS retirement? (to be done at a later date.)

ANSWER:  If one is born after January 2, 1954 - when they file for Social Security retirement whether early or at FRA, they are "deemed" to be filing for ALL of the retirement benefits for which they are entitled.  They will get the higher amount of any benefit to which they are entitled - they do not get both.

In the case you described - Since she is having to file for ALL of her retirement benefits when she files and the high benefit is her spousal benefit - the way they designate it only shows that she is getting some from her own benefit and the remainder of the whole spousal benefit ($ 902) from the husband's record.  It is still her higher benefit.

2.  A friend of ours recent told us that her spouse gets $1400 for his retirement (he's older) but She only gets $550.   Seems she is not getting the additional benefit of claiming up to 50% of her husband return?  Is there any way for them to update her SS claim so that she gets $700 (max 50% of her husband's SS?  Deemed filing?   

ANSWER:  I have to do a little guessing here since not all the facts are known. 

You said the higher earning spouse is older.  That may mean that this spouse did not file for SS retirement until they were 70 years old - if that is the case, this spouse earned some delayed retirement credits between his FRA and 70 years old (about a 32% increase) when he filed for his retirement - 

A spousal benefit does NOT include these delayed retirement benefits.  The spousal benefit is only 50% of what the other spouse's benefit would have been at FRA, not at 70.

If my assumptions are incorrect in this Question #2 - more info would be needed like their ages when they filed for SS retirement and their birth year.

[KenT845479]

Regarding the second scenario...  (The husband/older person) retired at 65.  Is it still 50%?

[Tonster521]

@KenT845479 Because the second scenario does not indicate the spouse is entitled to a worker benefit (old age or disability), the SS benefit of $550 is probably a spousal benefit. Spousal benefits are reduced if started before the spouse's Full Retirement Age (FRA). The reduction is 25/36 of 1% for the first 36 months and 5/12 of 1% for months exceeding 36 months. Moreover, if the SS Beneficiary started receiving benefits before FRA, the Spousal benefit formula calculates the reduction based on the SS Beneficiary's reduced SS benefit. At any rate, if the spouse started Spousal benefits prior to attaining the spouse's FRA, the spousal benefit formula will always be less than 50%. Here are some percentages for a spouse who attains FRA at age 66: age 62/35%, age 63/37.5% , age 64/41.7%, age 65/45.8%, and age 66/50%. The math is challenging. There is a calculator at ssa.gov; however, you need birth dates.Hope this helps. 

[fffred]

@KenT845479 

@GailL1 makes good points in her follow-up.

To clarify the rule for spousal benefits on the worker's record. The spouse will always get 50% of the worker's benefit. If the worker took their benefit at some age younger than their own full retirement age then the worker's benefit is reduced accordingly. And a result of this is that the spouse's benefit in dollars is also reduced but will still be 50% of that benefit.

Further, if the spouse takes their spousal benefit at some age younger than their own full retirement age then that benefit is reduced according to the rules. 

If you want to get a bit deeper (but you don't have to):

The worker might increase their benefit by delaying their benefits beyond their full retirement age. In this case they get a boost in the dollar amount for each month they delay, up to age 70. (the boost works out to 8% per year, not compounded). But the spouse does not get the advantage of these "delayed retirement credits". Thus there could be a situation where the worker gets a benefit amount that takes advantage of the delayed retirement credits, but their spouse may have taken their spousal benefit at an age younger than their own full retirement age and consequently have their "50%" reduced.

Now if the worker dies then the spouse will get the full benefit paid to the worker, including the delayed retirement credits. Although this amount will be reduced if they are younger than their own full retirement age.

A bit confusing you say? Indeed.

I have crunched these numbers for myself and my wife. I plan to take my benefit at age 70, when it will be 1.32 times my benefit at "full retirement age" (for me, 66). The 1.32 factor is four times the 8% per year credit. If my wife takes her spousal benefit at her "FRA" of 67 she will get 50% of my age 66 benefit (plus any cost of living increases). But we plan for her to take her benefit at 62.

Why so? I mean, why delay my benefit just to take hers early? Aside from any "break even" considerations my thought is that as my widow she will get a larger amount of cash, being 1.32 times my FRA benefit (plus COLAs), and that is important because she is 11 years younger than I am and likely to live many years after I'm gone. And we plan to take her benefit at 62 simply to help our cash flow and get some income.

I don't have the figures immediately at hand but I have gone through them in detail. But roughly, with my taking benefits at age 70, and if I die soon after that, such that she took survivor's benefit at age 60 (the youngest for a widow, unless there are young children), the reduction in her benefit for benefits at age 60 rather than her FRA of 67, would be "around" 32%, the same percentage that my own benefits increase by waiting until 70. So in this case she immediately gets my FRA benefit at her age 60 (and I am dead). And for each year that I live longer she would get that much more as her survivor's benefit, up to the 1.32 times my FRA benefit (and she'd get the COLAs as well).

Edit:  adding this table that relates my widow's reduction factor for taking her survivor's benefit prior to her FRA, and how that comes out "net" with considering my own DRC (assumed to be 32%) This backs up my verbal description from last night.

In the table:

Age = Survivor's Age. I have assumed that 67 is their FRA

N = number of months between age at my death and FRA

Reduc = Reduction factor applied to survivor's benefit

Net = Net survivor's benefit factor = (1 - Reduc)

Net with DRC = Net factor with 1.32 Delayed Retirement Credit applied

For completeness, the table runs down to age 60, which is the youngest age at which the widow can obtain survivor benefits under normal circumstances.

So it is really at her age of 62 that her net benefit will be about equal to my benefit at my FRA. I ran the table down to 60, but I don't plan to die before her age then. (as if I have control over that)

Age	N	Reduc	Net	Net with DRC
67	0	0	1	1.32
66	12	0.04071	0.95929	1.26626
65	24	0.8143	0.91857	1.21251
64	36	0.12214	0.87786	1.15878
63	48	0.16286	0.83714	1.10502
62	60	0.20357	0.79643	1.05129
61	72	0.24429	0.75571	0.99754
60	84	.285	.715	0.9438

[GailL1]

@KenT845479 

Like I said when answering Scenario #2 - because my previous answer was a guess, like I said.

If my assumptions are incorrect in this Question #2 - more info would be needed like their ages when they filed for SS retirement and their birth year.

In addition, what type of benefit is is the wife currently getting ($ 550)?

Did either of them work for a government agency where they did not pay into the Social Security system?

You see, details are real important - we assumed that the wife was getting spousal benefits now but that is not the case with the little new info you provided.  Heck, for all we know, she could be getting her current benefit from an Ex-spouse or her own benefit.

Unless we know more details, it is impossible to give you an answer unless we just keep guessing and guessing.

[fffred · Accepted solution]

@GailL1 That's a good surmise for the second question and may be the explanation. As you say though, without more information we can only guess or conjecture.

If the hubs did take SS at 70 with the 1.32 factor, that means his FRA benefit would have been $1400 / 1.32 = $1060. But we'd have to back out the last few years of COLA as well, which I don't really have handy right now. But the spouse's benefit would get the same COLAs so maybe it's a moot point.

Maybe the $1060 is close enough to the $550 that this is the explanation. If the wife also worked and has a SS benefit, but took her benefit reduced at, say, 62 or so, that would complicate this as well. But I'm sure that your explanation is at the heart of it.